By: Dr. James Tuffour (University of Cape Coast Business School)
In Ghana, music and dance are integral parts of all public gatherings. As I’ve previously expressed somewhere, we dance when we’re either happy or sad. For instance, when a new member joins the family, we dance, and when one dies, we do likewise. We even dance at worship centres where many expect sobriety. This presents a cultural shock for people that are not familiar with the Ghanaian lifestyle.
Dancing at church reminds me of a confession made by the Archbishop of Canterbury (Head of the Church of England), many years ago. President Kufuor had responded to the invitation of Queen Elizabeth II, and in one public meeting, the priest acknowledged that the Church in England (Anglican) was very quite until the Ghanaians joined them. With their music and dance, Ghanaian congregants brought some energy into the worship of God, said the priest.
Indeed, if you’re yet to experience Ghanaian traditional dances like Kete, Adowa, Agbadza, Takai, Kpanlogo, Kundum, etc., you’d come to the conclusion that dancers here require lots of energy to do justice to their job. This is because, actors in most cases would have to jump, squat, shake themselves, and move every muscle of the body. In fact, some of our dances require a constant 360-degree movements. Others, too, need forward and backward movements.
Interestingly, our currency (the Ghana Cedi) metaphorically dances, too. Must I say that the Cedi is a good dancer because she can do the forward and backward movements very well. Yes, she dances to the tune of any music she hears – internal and external. However, often, the Cedi takes one-step forward, and a number of steps backwards.
As politicians have made us to believe, when the ‘big and powerful guys’ from far away lands sneeze, the Cedi must catch cold, instantly, then, she dances. Indeed, it could be wars in the Gulf Region or the Crimean Peninsula, or terrorism in the States, or any external government policy, then the Cedi dances. Remember, this dance is one-step forward, and multiple ones, backwards.
I needn’t provide you detailed statistics for you to appreciate this ‘majestic’ dance of the Cedi. Just a gist of information would help in this narration. In 2007, one Cedi was exchanged for about a US Dollar (USD). Less than two decades thereafter, it has lost so much weight, perhaps, from dancing. In it’s worse performing era, it depreciated to as low as about 17 plus to the USD. True, at a point in time, it became one of the poorest performing currencies on planet earth. It is equally fascinating that at another time, it was rubbing shoulders with the big guys.
Interestingly, in recent times, it appears the Cedi is moving several steps forward than backwards in her dance. Some commentators have associated this new development to certain factors, many of which I don’t contest. For example, there has been a sharp rise in the prices of Ghana’s major export commodities – gold and cocoa. Again, others refer to the weakening USD as a result of the infamous tariff wars between the US government and the rest of the world. For me, one factor that stands out is currency speculation from the Ghanaian business community.
Speculation could be driven by government policies and pronouncements. From a layman’s point of view, when the public has some reasonable amount of confidence in government policies, people are less likely to chase the fewer USD (mainly saved from our meagre exports and remittances) with their idle Cedis. When the people don’t trust government’s economic policy, it is believed that many business actors may convert their Cedis into USD that they don’t necessarily need, immediately. Here, some business actors often anticipate that they might not have access to the USD to transact business when it was needed the most. Others too, would want to secure the value of their assets. True, some of these actors are opportunists who may want to benefit from the dancing Cedi.
Arguably, currency speculation has it’s roots in Behavioural Economics. The economists claim that as rational beings, our decisions are influenced by several psychological factors. As the Akans say it, sɛ abaa da hɔ a, yɛ nnyɛ nhwɛ haa mma bodom nka yɛn, to wit, no rational being stays helpless for the stray dog to bite them when they are equipped with a stick. So, knowing that your capital in Cedis could vanish into thin air, rational beings would quickly look for a safe haven, in this case, a much more stable currency like the USD. Consequently, when more Cedis chase a fewer USD, the latter would rise. This follows the laws of demand and supply. For instance, a low supply of USD may lead to a hike in its price, and the vice versa is true.
It is worth repeating that currency speculation is mainly fueled by investor confidence. Thus, when investors don’t believe in government policies, their sentiments trigger speculative activities. This is why in 2022/3, I openly supported the removal (or reshuffling) of the Finance Minister from office. Even though I had enormous respect for the gentleman in question (I still do, despite some of his shortcomings) for being an accomplished entrepreneur and business executive, I was of the opinion that the President did the needful by injecting fresh blood into the fiscal space. I was so much convinced about my position, particularly, when the Cedi plummeted just after a mid-year budget was tendered in Parliament to save her from further bleeding.
One funny thing about currency speculation is that it could happen so easily and swiftly. Can you believe that mere gossips and rumours could trigger speculative activities? Hmm, to use the words of the renowned novelist, Chinua Achebe, speculation could spread like bushfire in the harmattan season. This is why good Finance Ministers and duty bearers in sensitive offices don’t run public commentaries or talk loosely. Yes, their words could be misinterpreted, that could bite hard!
I was therefore surprised and also worried when a member of the governing board of the central bank put out some sensitive information about the operations of foreign bank accounts. Fortunately, the management of the bank was swift in communicating their official position, [which was] contrary to the disclosure made by its board member. Arguably, the bank’s inaction would have been a disaster for the wobbling Cedi.
Today, the Cedi appears to be recovering, however, we’re not yet out of the woods. For me, the new government is still in the ‘honeymoon period’ – investors are keenly watching and evaluating emerging policies. Debatably, President John Dramani Mahama‘s government has started on a good note, yet, what can sustain this trajectory are hard work and carefully drafted socio-economic policies. Interestingly, there’s no perfect public policy in the world. This is because any government policy may be perceived as either good or bad, depending on where one stands. For example, increasing local production could affect importers’ income, negatively. What’s important now is to look at the long-term effect of our economics decisions.
We’ve always talked about broadening the tax net (and of course, prudent use of scares resources), import reduction, adding value to our raw materials before export, sustainable debt management, etc. These, the government should have clear plans for in the short, medium, and long-terms. Such plans are effective for boosting investor confidence than the usual public relations gimmicks.
Yes, we can cut so much waste in public procurement. Strategic institutions like the Cocobod, Goldboard, ECG and their cousins could help us drive the economy on the right path. For example, why should we import jute bags to store our cocoa in this 21st century when the production of these materials isn’t complex? The young Ghanaian entrepreneur should be resourced to take over production and supply. Again, why should we import toiletries and sanitary products worth millions of dollars when young women could be empowered to produce these with locally-sourced materials? Why should we import jewelry from UAE, India and Switzerland where the artisanal goldsmith struggles to buy gold in a major gold producing country?
If we fail to face reality and pretend to be doing well, we’ll be exposed as usual. I’m not a prophet of doom to predict that the Cedi will begin her usual dance in the very near future. To borrow the words of Dr. Mahamudu Bawumia, the exchange rate will always expose our weak economic fundamentals. So, in the short-term, as we make some strides, let’s think about sustenance. This, I’ve seen in the motto of an educational institution, carefully captured in Latin as ‘quam bene non quantum’, how well, not how much. Yes, how well the Cedi performs is better than how much we can save in the short-term.
Today, as the Cedi dances majestically, we should be thinking about preparing some food and water to fuel her energy – that’s all about sustainability.
Writer:
Dr. James Tuffour
Lecturer, University of Cape Coast Business School
